POLICY PERSPECTIVES | April 15, 2018
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Legislative Session Update
Headed for Overtime
The last two weeks have been filled with floor debate and lots of behind-the-scenes negotiating about taxes, budget and any remaining policy issues. While we are still technically at an impasse on taxes, there has been a lot of activity between the Chambers, which is a good sign.
 
Legislative per diems officially run out after the 100th day of the session on Tuesday, April 17th. At that point, legislators will largely lose their clerks for the rest of the session, so there will be added incentive to wrap up for the year.
 
On top of that, some legislators are affected by the June 5 Primary Election, so the longer the session continues, the fewer days they have to campaign. Additionally, gubernatorial candidates are prohibited from taking PAC checks until 30 days after the legislative session (when the Governor's veto period ends), so if session goes until Sunday, May 6, the Democratic candidates for Governor will be shut out of those large checks before their June 5 primary.  That impacts Senator Nate Boulton and Cathy Glasson the most, as they have been endorsed by most of the groups that own those PACs.  Governor Reynolds is also unable to accept those checks, but she does not have a primary opponent, so it's not an issue on the Republican side. 
 
Publication Note - This is most likely the last regularly scheduled update that will be published until the Legislature adjourns for the year. Keep an eye out for timely alerts requesting you to take action.
 
What do we need to do to close down the session?
The one thing legislators and the Governor HAVE to do is enact a Fiscal Year (FY) 2019 budget for the State. This will require the following:
1.)  Determining an overall number that can be spent (in the neighborhood of $7.5 billion),
2.)  Dividing those funds up (targets) between the seven appropriations subcommittees for allocation into the ten Appropriations bills, and
3.)  Passing all ten in identical form to the Governor which she then signs into law.

There are a number of smaller steps along the way, but that is the general outline.
 
Since the 100 day scheduled session is almost up, why have we not begun this Appropriation process? Because in addition to the budget, the Governor, House and Senate ALL agree that they need to enact tax cuts. Why? As Speaker Linda Upmeyer explained in her latest newsletter, the recently enacted federal tax cuts will reduce taxes on Iowans by an estimated $1.8 billion per year. However, because Iowa is one of three states that have federal deductibility, a decrease in federal taxes means that state taxes on Iowans will rise by $107 million in 2018 (and $153 million in 2019) if the Legislature makes no changes in tax policy.
 
The tax plans
The Governor has a tax plan she released in February. Her plan is summarized HERE and was introduced in the Legislature as HSB 671 and SSB 3195. The House has recently released their plan, summarized HERE and in legislation as HF 2489. HF 2489 could be passed by the House this week. The Senate has introduced two plans, the first of which (SF 2383) was by far the largest of all the tax cut proposals and was passed by the Senate over to the House on February 28. The most recent Senate plan was announced on Thursday; the language is not yet available but a one pager is available HERE.
 
All of the tax reform plans have cuts to personal income taxes and an expansion of the sales tax to cover online purchases. The biggest differences are the size of the tax cuts, whether to include corporate cuts, whether to include getting rid of federal deductibility and whether to include a tax increase on credit unions. With the House backing down completely on getting rid of deductibility while the Senate has doubled down on it, we may be waiting around for a while for resolution of the tax reform issue.
 
FY 2019 Budget Status
The House and Senate were reportedly waiting on moving any budget bills until the tax reform issue was resolved. However, in the wake of the two chambers moving vastly different tax bills, the House has gone ahead and scheduled four appropriations subcommittee meetings for Monday. They look to bring the following four spending bills out of subcommittee - Transportation, Economic Development, Justice, and Agriculture and Natural Resources. This will constitute the "House version" of those bills, and should not be assumed to be "signed off on" by the Governor and Senate.
 
Given all that, when will we finish for the year?
We all wish we had the answer to that question. Everyone is making guesses, ranging from Cinco de Mayo to mid June. One thing to keep in mind - Once they reach agreement on taxes and budget, it will still take a solid week to draft the bills, draft amendments, make edits, discuss everything in caucus, debate the bills, and close down. While rank-and-file members wait for all that to happen, we often see them taking up other issues and trying to tinker with new policy ideas, which then adds even more time to closing down the session. So buckle in, we'll be here a while.
What Should You Do?   
 
As was the case in the last issue of Policy Perspectives, your continued advocacy from now through the end of the legislative session will be crucial. 

In the days ahead, we should learn more about funding levels for IEDA and other programs of interest to you. 

We also need legislators to keep hearing from you about issues we are watching, like not moving a TIF bill and protecting property tax backfill dollars to local governments.
 
We need legislators to hear from you about the importance of eliminating federal deductibility, a long time PDI priority, when they enact tax reform.

For all of these reasons, please keep weighing in with your legislators and keep an eye out for legislative alerts from us that require attention!!  We still have plenty of work to do, so don't let up!! If you don't who your legislators are, just go HERE

Bills Being Tracked for PDI

This is a list of the bills being tracked for PDI. The bill list is updated constantly, so if you wish to see the updated bill list, just go to
http://www.ialobby.com/billtracker/pdi/  
 
Bill# Title Status
HF2038 
Nonreversion/Reallocation of State Funds
Summary | Details 
House Appropriations Committee 
 
Allows state agencies to keep up to 10% of the funds appropriated that are unencumbered or unobligated at the close of the fiscal year (funds won't revert).
HF2046 
Sales Tax Collection
Summary | Details 
House Ways & Means Committee 
 
Amends definition of "retailer maintaining a place of business in this state" for the collection of sales tax from out-of-state retailers.
HF2047 
Legislative Tax Credit Review Committee
Summary | Details 
House Ways & Means Committee 
 
Creates a legislative tax credit review committee.
HF2063 
Urban Renewal Law Changes
Summary | Details 
House Ways & Means Committee 
 
Makes changes to the urban renewal law.
HF2098 
Job Training Tax Credit Program
Summary | Details 
House Ways & Means Committee 
 
Creates a job training tax credit program.
HF2253 
Construction Competitive Bidding Requirements
Summary | Details 
Signed
 
Makes changes to competitive bidding requirements for construction on properties that certain government entities will lease or lease-purchase.
HF2321 
Criminal History Checks
Summary | Details 
Signed
 
Requires a criminal history check for department of workforce development applicants and makes changes to unemployment insurance requirements.
HF2343 
State Agency Restrictions
Summary | Details 
Signed
 
Prohibits a state agency from implementing or enforcing any standard, requirement, or threshold unless explicitly required or permitted by a state statute or a federal statute or regulation.
HF2373 
Property Taxation
Summary | Details 
House Ways & Means Committee 
 
Modifies property taxation relating to assessment and exemption of certain property, modifies provisions relating to property assessment appeals, and provides for the reimbursement of certain appeal costs.
HF2374 
Tax Credit Repeal
Summary | Details 
House Ways & Means Committee 
 
Repeals certain state income tax credits, and provides for the future repeal of tax credits.
HF2440 
Water Quality Programs
Summary | Details 
Senate Unfinished Business Calendar
 
Makes changes to existing water quality programs.
HF2447 
High Quality Jobs Program
Summary | Details 
House Ways & Means Committee 
 
Requires that at least 50 percent of awards made through the High Quality Jobs Program be awarded to small cities.
HF2448 
Sports Betting
Summary | Details 
House Ways & Means Committee 
 
Authorizes gambling licensees to conduct sports betting.
HF2458 
Future Ready Iowa Act
Summary | Details 
Signed
 
Creates the Future Ready Iowa Act.
HF2463 
Workforce Housing Tax Incentives Program Eligibility
Summary | Details 
Senate Ways & Means Committee 
 
Amends the definition of "small city" for eligibility for the Workforce Housing Tax Incentives Program to include any city or township located in whole or in part in one of the 88 least populated counties.
HF575 
Bottle Bill Repeal and Replace
Summary | Details 
House Ways & Means Committee 
 
Repeals the beverage containers control law and replaces it with new recycling, litter control, and community enhancement programs.
HF597 
The WISE Solution for Water Quality
Summary | Details 
House Ways & Means Committee 
 
A permanent $180-200 million/year that flows into the Natural Resources and Outdoor Recreation Trust Fund, at least 60% of which would have to be used for specific water quality.
HF603 
Eminent Domain
Summary | Details 
Senate Unfinished Business Calendar
 
Addresses the use of eminent domain and the procedures and compensation required for the use of eminent domain.
HF656 
TIF - $5.40 Levy Removal
Summary | Details 
House Ways & Means Committee 
 
Would remove the $5.40 levy from the TIF increment for all future projects.
HSB636 
Innovation Fund Tax Credit Program
Summary | Details 
House Ways & Means Committee 
 
Extends the innovation fund tax credit program.
HSB672 
Telephone Company Property Tax Assessment Process
Summary | Details 
House Ways & Means Committee 
 
Changes the central assessment process for telegraph and telephone companies.
HSB678 
Property Tax Backfill
Summary | Details 
House Appropriations Committee 
 
Phases out the roughly $150 million property tax backfill, starting in FY 2019 (which starts July 1, 2018).  Cuts one-third ($50 million) from the backfill in Year One and then $25 million every year thereafter.
HSB681 
TIF Destruction - Removes the $5.40 and County Basic levies
Summary | Details 
House Appropriations Committee 
 
This bill would remove the $5.40 school levy and the county basic levy (roughly $3.50/1000) from the TIF increment, drastically lowering the amount for which can be bonded for on a project.
Opt-In: This bill would allow a school district to opt all or a part of their $5.40 levy into the increment voluntarily, but with the understanding that the revenues would no longer be backfilled by the State. The bill would allow the county to opt all or part of their county basic levy into the increment voluntarily. 
Summary: The bill would reduce by roughly $8.90/1000 the bonding capability of TIF, crippling the tool in most cases.  Unless a developer was able to get the school and county to opt the levies into a project, but since some counties and school boards do not meet very often, the timing required to put deals together could kill projects.
HSB684 
Revenue Estimating Stabilization Fund
Summary | Details 
House Appropriations Committee 
 
Lowers the state general fund expenditure limitation and creates a revenue estimating stabilization fund.
SF2043 
Inheritance Tax Repeal
Summary | Details 
Senate Ways & Means Committee 
 
Repeals the state inheritance tax and the state qualified use inheritance tax.
SF2069 
Forest Reservation Property Tax Exemption
Summary | Details 
Senate Ways & Means Committee 
 
Lowers the property tax exemption for forest reservations.
SF2074 
Raceway Facility Construction Sales Tax Rebate
Summary | Details 
Senate Ways & Means Committee 
 
Makes changes to sales tax rebates for construction at certain raceway facilities.
SF2080 
State General Fund Expenditure Limitation
Summary | Details 
Senate Appropriations Committee 
 
Revises calculations for the general fund expenditure limitation, increases reserve fund balances, creates a safety net fund, creates an Iowa personal income tax rate reduction fund, and provides for related state personal income tax rate reductions.
SF2081 
Commercial and Industrial Property Tax Replacement Claims
Summary | Details 
Senate Appropriations Committee 
 
Eliminates the appropriation for commercial and industrial property tax replacement claims.
SF2117 
FY18 Deappropriation
Summary | Details 
Signed
 
Cuts the current fiscal year (FY18) budget by $50.1 million, about $20 million more than the Governors' recommendation.  Cuts regional tourism marketing, skilled worker and job creation fund, hawk-i, autism support program fund, Regents universities, community colleges, vocational rehabilitation, autism support program, human services,
 
SF2152 
Tax Credit Transferability
Summary | Details 
Senate Ways & Means Committee 
 
Provides an exception to the tax credit transfer restrictions placed on housing businesses under the enterprise zone program
SF2161 
Agriculture and Natural Resources Programs
Summary | Details 
Senate Ways & Means Committee 
 
Amends several agriculture and natural resources programs.
SF2267 
TIF Reduction
Summary | Details 
Senate Ways & Means Committee 
 
Makes changes to Tax Increment Financing.
SF2287 
High Quality Job Program Tax Incentives
Summary | Details 
Senate Ways & Means Committee 
 
Allows investment tax credit to an eligible business.
SF2311 
Public Utilities
Summary | Details 
House Unfinished Business Calendar
 
Modifies various provisions relating to public utilities.
SF2353 
State and Local Workforce Development Boards
Summary | Details 
House Floor
 
Makes changes to the state and local workforce development boards.
SF2383 
Senate Tax Reform Package
Summary | Details 
House Ways & Means Committee 
 
The Senate's tax reform package.
SF2388 
Telephone Company Property Tax Assessment Process
Summary | Details 
House Floor
 
Changes the central assessment process for telegraph and telephone companies.
SF2393 
SAVE Fund Extension
Summary | Details 
Senate Floor
 
Extends the 6 percent sales tax rate and the allocation to the SAVE fund until January 1, 2050.
SF2398 
Industrial Hemp Act
Summary | Details 
House Ways & Means Committee 
 
Creates the Iowa Industrial Hemp Act.
SF512 
Water Quality/Wastewater Treatment
Summary | Details 
Signed
 
Modifies existing wastewater treatment program, establishes new water quality programs, and creates a water service excise tax and sales tax exemption.
SSB3195 
Tax Reform
Summary | Details 
Senate Ways & Means Committee 
 
Makes changes to income taxes, the sales and use taxes and local option sales tax, the hotel and motel excise tax, the automobile rental excise tax, the Iowa educational savings plan trust, and the Iowa ABLE savings plan trust.
SSB3200 
Workforce Housing Tax Incentives Program
Summary | Details 
Senate Ways & Means Committee 
 
Modifies the workforce housing tax incentives program.
SSB3201 
EDA Housing Agreements
Summary | Details 
Senate Ways & Means Committee 
 
Allows EDA to grant an extension for up to one year from the date the extension for eligible housing businesses to complete building or rehabilitation projects.
Your Legislative Team
The Advocacy Cooperative | Campbell/Patterson Consulting LLP, PO Box 1403, Des Moines, IA 50131
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